Charlie Munger, who passed away this week at age 99, may have afforded a mega-mansion—or a number of of them. As a substitute, the billionaire investor stayed put in the identical modest residence in Los Angeles for seven many years.
One motive, defined the longtime enterprise companion to Warren Buffett, was that extravagant properties don’t actually make individuals happier.
He and Buffett had watched their buddies who’d develop into rich construct “really fancy houses,” he stated in a CNBC interview that was performed just a few weeks earlier than his loss of life.
However “I would say in practically every case, they make the person less happy, not happier,” he stated.
Having a fundamental home “really helps you,” he stated. However “having a really fancy house, it’s good for entertaining 100 people at once. It’s a very expensive thing to do. And it doesn’t do you that much good.”
Munger did think about shopping for an even bigger home, he stated, however he “still decided not to live a life where I look like the Duke of Westchester or something. And I was going to avoid it. I did it on purpose.”
One motive is that he apprehensive that an opulent life-style would spoil his kids.
“I didn’t think it would be good for the children,” he stated. “You grow up in a rich family, your duty is to use the wealth and live grandly. That is what everyone is doing with the money. You will learn from people who are doing it.”
‘A house can be a nightmare’
Buffett, much like Munger, has lived in the identical home for many years—one he purchased in Omaha, Nebraska, for $31,500 in 1958. The Berkshire Hathaway chairman and CEO nonetheless considers the house, now value over $1.3 million, one of his best investments.
In Might, when guests descended upon Omaha for the annual Berkshire shareholder assembly, many Buffett followers snapped images in entrance of his unremarkable residence, as native TV station WOWT reported.
Buffett wrote in 2010 that whereas it’s straightforward to really feel pressured to purchase a house, it may be smarter to hire, relying on one’s private funds.
“A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender—often protected by a government guarantee—facilitates his fantasy,” he wrote. “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”
Lottery winners typically quickly buy many fancy homes, which monetary advisors warn is a mistake.
“I’ve seen clients purchase large homes in faraway locations that they ultimately realize they will not use frequently and end up being a major ongoing financial burden that took several years to sell,” Paul Karger, cofounder and managing companion of wealth advisory agency TwinFocus, lately told Fortune.
Munger’s frugality prolonged past his housing alternative, nonetheless.
“His idea of traveling in style,” Buffett wrote of Munger in a 1989 letter to shareholders, “is an air-conditioned bus, a luxury he steps up to only when bargain fares are in effect.”
